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Roco/Fleischmann consolidating HO under Roco for 2019. Fleischmann to be N scale only.

Roco/Fleischmann have announced a restructuring of the companies that will see all HO scale product move to Roco and Fleischmann to be exclusively N scale from 2019 onwards. While this may be a positive sign in that the firms can still reduce costs to stay competitive to today's uncertain hobby market, it is sad to see the demise of Fleischmann HO products which have been a staple in the European model railway market for many decades.

What this means for our customers is unknown right now. We expect that as 2018 continues Fleischmann HO products will slowly be discontinued. We are unsure how many/how soon Fleischmann HO products will be relaunched under the Roco brand. If you are have been putting off any Fleischmann HO purchases, we do recommend placing orders as soon as possible to guarantee availabilty. We will do our best to keep our customers updated as the changes are put in place.

The model railway group will relocate most of the injection molding from its production site in Gloggnitz (Lower Austria) to Slovakia. This measure will lead to a reduction of 52 of the 107 employees at the Lower Austrian site by the end of 2018. Negotiations on the social compensation measures after the reduction of staff will start soon. The product portfolio will also change for the restructuring of the model railway group: the German brand Fleischmann will no longer be offered in gauge H0 (scale: 1:87) from 2019, but only in gauge N (scale: 1: 160 ), where it is the market leader. "These are indispensable measures to improve the cost structure of production and market performance of Europe's second largest model railroad manufacturer," said Managing Director of Model Railways Holding and owner representative of RVS, MMag. Hannes Grießner, today, Friday, March 2, after a company meeting in Gloggnitz.

The employees in Gloggnitz have already been informed by the management about the necessary measures. According to Grießner, Gloggnitz can not be continued with its existing cost structures to the same extent without jeopardizing the entire company. At the site not only the models are designed, but also tools and molds are produced. In addition, several million plastic parts are produced by injection molding, from which the housings of locomotives and wagons are assembled.

Cost structure needs to be improved The relocation concept now foresees that the majority of this injection molding production will be relocated to Slovakia this year, meaning that half of the employees in Gloggnitz will be dismantled. A production in the current extent is no longer possible due to the high personnel costs, said Grießner. Construction, toolmaking and the complex part of the injection molding remain in Gloggnitz. The Model Railway Group offers the affected employees compensatory measures to reduce hardship.

Restructuring must bring simplification The company has been under construction since the summer of 2015 and has seven-digit departures in the operating area. It was possible to increase sales again and set up a new production site in Vietnam, emphasized Grießner. Further measures for the adjustment of the production structures in Europe are however indispensable, in order to become again lasting profitable. Currently in Austria (Gloggnitz, construction, tooling, injection molding), Slovakia (Banska Bistrica, surface treatment, engine production) and Romania (Arad, assembly, surface processing) produced.

Production center Asia in focus In parallel with the restructuring in Europe, the new location in Vietnam will be expanded, currently employing 135 people. It is to become the production center in Asia, where basically all components can be manufactured and assembled. A production for high-end products in Europe remains, emphasized Grießner. The model railway group does not rely on the one-sided shift to Asia. The Raiffeisenverband Salzburg, the company's long-standing principal bank, took over the model railway group in October 2017. Subsequently, the already initiated restructuring plan was reviewed and confirmed in its cornerstones. However, the schedule must be extended for two more years, announced Grießner.

Concentration in the product portfolio Grießner also announced a change in the product portfolio. As of 2019, there will be no more Fleischmann models in the H0 gauge. In return, the successful track width N of the traditional German brand will be expanded. "We are the market leader here and see much better market opportunities in the medium term than in H0," explained Grießner. Fleischmann's Lane N could develop much more strongly in the medium term as soon as it is equipped with a higher investment volume in 2019 and more newly constructed models are launched on the market. In the H0 gauge, the product portfolio of the two Fleischmann and Roco brands was heavily overlapped for historical reasons, explained Grießner. Roco usually have the more modern designs and therefore perform much better in H0. The focus on the strengths of the product portfolio does not allow Fleischmann H0 to be continued. This change has hardly any effect on the location of Heilsbronn, emphasized Grießner. The brand management of Fleischmann is already settled in Austria, the know-how of the Fleischmann team will continue to be needed for N scale.

The enterprise The Model Railway Group, based in Bergheim near Salzburg (Austria), is the European market leader in the DC segment with the two brands Fleischmann and Roco and the number two for model railways in Europe. It currently employs 900 people in five countries and generates a turnover of 49 million euros (2017). Among other things, the company is characterized by digital innovations and a strong international product range.

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